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US house prices… are falling Source: S&P / Case-Shiller 10 City index, Bloomberg. Data to 31 July 2008 Index Los Angeles -26.2% San Francisco -24.8% New York -7.4% 10 city decline is 17.5% over 12 months

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Australian sharemarkets and US Recessions Performance of All Ordinaries around US recessions US recession start US recession end All Ords peak date All Ords trough date Duration (months) size of peak to trough fall subsequent 12 months performance Australian recession Dec-69Nov-70Jan-70May-704-28.6%+4.0%no Nov-73Mar-75Jan-73Sep-7420-59.2%+50.9%yes Jan-80Jul-80Feb-80Mar-802-20.3%+39.0%yes Jul-81Nov-82Nov-80Jul-8220-40.6%+38.7%yes Jul-90Mar-91Aug-89Jan-9117-32.4%+38.9%yes Mar-01Nov-01Jun-01Mar-0321-22.0%+27.3%no Jun-08??Nov-07Oct-08?11?-45.2%?no? Source: Datastream, UBS calculations, Colonial First State

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Summary  Australia is not immune from US financial problems  High interest rates are hurting the Australian economy  Australia still has many drivers of growth  2008-09 will continue to be a bumpy ride  The sharemarket grows with earnings over time Source: Colonial First State